Shipping contributes about 3 per cent of global carbon emissions. The lack of a single regulatory environment makes it difficult to bring this down, explains Dr Sarah Mander.

Shipping sits at the heart of international trade and has been the primary means by which globalisation has been facilitated. So it is not surprising that carbon emissions from shipping constitute an increasing problem – shipping contributed 2.7% of emissions in 2007, rising to about 3% today.

Increasingly efficient ships, powered by diesel, have been able to carry more cargo, to more countries. Technological innovations, coupled with infrastructure deployment, have reduced the costs of shipping, creating the global infrastructure networks and markets that we see today.

International shipping has enjoyed a long period of growth; global trade has expanded at over 4%, in terms of tonne-km, since the 1990s. This expansion of a fossil-fuelled sector has resulted in CO₂ emissions increasing by 3.7 % per year since the 1990s: higher than the average of other sectors. The global recession and high oil prices reduced demand for shipping, but this merely caused a blip on the rising trajectory of emissions.

The structure of the shipping sector makes the reduction of its climate change impacts particularly challenging. It is a highly segmented industry, with a market that spans different actors, regions and nations. Shipping is arguably under less regulatory pressure to reduce emissions than are other sectors.

Shipping is regulated – as regards the impact on climate change – by the International Maritime Organisation (IMO). Whilst the IMO may agree in principle to address climate change, the implementation of regulation is hampered by the maritime principle of ‘no more favourable treatment’.

This principle ensures that shipping standards apply equally to all nations – but it is at odds with the philosophy of climate change regulation. That regulatory approach differentiates between countries in terms of their responsibility, based on their historical emissions. The pace of regulation through the IMO has thus been slow and whilst policies to improve the energy efficiency of new ships are being implemented, these will only slow the growth in emissions rather than reduce emissions in absolute terms.

In the UK, CO₂ emissions from domestic shipping are included within the 2050 climate change target and short-term emissions budgets. But international shipping emissions are excluded. The UK’s Committee on Climate Change (CCC) initially advised that international emissions should be included. However, the decision by the EU to suspend the full inclusion of aviation within its emissions trading scheme led to the UK Government deciding to exclude international shipping emissions from its budgets and the 2050 target. Instead it has deferred a decision until agreement of a fifth carbon budget in 2015.

So, where does this leave the prospects for reducing emissions from the shipping sector?

Researchers on ‘The High Seas Project’ have spent three years considering how the UK can reduce emissions from international shipping. Broadly speaking the CO₂ emissions from the shipping sector depend on the quantity of goods transported, the distance over which they are transported, engine efficiency and the carbon intensity of the fuel used. A reduction in the CO₂ emitted can therefore be achieved by changes to three core elements – through technology developments, changing operational practices, or shifts in demand.

The shipping sector has several technology options ranging from the incremental (such as changes to propeller design) to the more radical (for example, using sail propulsion, or low carbon fuels). Whilst some ship owners (who will generally pay for new technologies) want to innovate and explore incremental technology improvements, many potentially beneficial technologies are under-researched, not fully commercialised, or considered to be too ‘niche’ to warrant investment at an appropriate scale.

Furthermore, depending on the charter agreement, ship owners may not be liable for their fuel costs, so they do not benefit from investment in new technologies. There is little strategic thinking in terms of technology deployment and little support for developers seeking to ‘de-risk’ niche technologies to prove their potential to a naturally conservative and cash strapped industry.

High oil prices, the impact of the recession and shipping overcapacity led to changes in operational practices, particularly in the container trade. Fuel prices nearly tripled between 2005 and 2012. In response, shipping companies slowed their vessels down – ‘slow steaming’ – to reduce fuel consumption. They maintained regularity of service by adding onto routes ships that would otherwise have remained idle.

Slow steaming has been challenging to client companies, which have had to adapt to longer delivery times and the prospect of more stock being tied-up on board. And it is unpleasant for those on board. Yet there is evidence that slow steaming has become embedded and it has reduced shipping emissions. The question is whether ships will speed-up again as global trade continues to recover.

Shipping meets the demand for movement of goods from other sectors. As demand for goods reduces, so does demand for shipping. New demand changes are on the horizon: 50% of imports into the UK are of fossil fuels, so energy system decarbonisation will impact on the shipping sector.

The past two decades have introduced globalisation, but we may now see more near-shoring, with innovations in manufacturing leading to production close to end markets, as well as increasing trade between developing nations and the emergence of new economic powers.  All these factors could reduce shipping demand.

There are many opportunities for companies and governments to move the shipping sector towards a lower carbon future. The impacts of climate change mean that whether or not those opportunities are taken, the sector must adapt to a more uncertain future.